Earnings Presentation

Transcription

1 Earnings Presentation 4 th Quarter, 2016 Disclaimer: This presentation may include references and statements on expectations, planned synergies, growth estimates, projections of results, and future strategies for Banco Votorantim, it s associated and affiliated companies, and subsidiaries. Although these references and statements reflect the management s belief, they also involve imprecision and risks that are highly difficult to be foreseen. Consequently, they may conduct to different results from those anticipated and discussed here. These expectations are highly dependent on market conditions, on Brazil s economic and banking system performances, as well as on international market conditions. Banco Votorantim is not responsible for bringing up to date any estimate in this presentation.

2 Executive summary Net Income of R$ R$ 426M in 2016 Consistent revenue generation, drop in credit provisions and cost base under control Highlights of results Net Income of R$ 426M Net Income of R$ 426M in 2016, compared to R$ 482M in 2015 In, the Net Income totaled R$ 119M (R$ 112M in ) Shareholders equity reached R$ 8.43B in Consistent revenue generation Income from Services and Insurance increased 17.3% in 2016/2015, more than offsetting the 1.3% decrease observed in the Net Interest Income, due to the conservatism in credit underwriting Net Financial Margin grew 11.0% in 2016, to R$ 2.56B, reflecting the drop in credit provisions Conservative approach to credit Expanded credit portfolio of R$ 60.9B in down 7.1% in 2016, but up of 1.4% in Wholesale: portfolio of R$ 27.4B, up by 2.4% in Auto Finance: portfolio of R$ 28.2B, an increase of 1.3% compared to Sept/16 Drop in delinquency 90-day NPL of 5.5%, flat in the quarter, and 20bps lower than Wholesale: 90-day NPL of 5.6% (: 5.8%) Consumer Finance: 90-day NPL of 5.5% (: 5.7%). Vehicles NPL dropped to 5.1% (: 5.3%) Effective cost management Personnel and admin. expenses grew 2.0% in 2016, compared to IPCA of 6.3% in the last 12 months Disregarding labor claims, the expenses would have reduced 0.4% in 2016/2015, despite inflation Efficiency Ratio for the last 12 months reached 38.8% in (: 39.4%) 2

3 Consolidated results Net Income of R$ 426M in 2016 Net Income (R$M) % Q15 2Q15 3Q15 4Q15 1Q16 2Q16 R$482M R$426M profit confirms the consistency of Banco Votorantim s results 3

4 Consolidated results Highlights of Results Consistent revenue generation, drop in credit provisions and cost base under control Managerial Income Statement (R$M) (R$ Million) 4Q15 Var. / Var. 2016/2015 ] Net Interest Income (A) 1,098 1,172 1, % 4,702 4, % ALL expenses¹ (B) (453) (492) (623) 26.7% (2,394) (2,079) -13.1% Net Financial Margin (A+B) % 2,308 2, % Operating Income/Expenses (543) (483) (575) 19.1% (2,276) (2,156) -5.3% Income from Services and Banking Fees % 961 1, % Personnel and Administrative expenses (608) (547) (674) 23.2% (2,332) (2,378) 2.0% Tax expenses (88) (87) (94) 7.7% (417) (372) -10.8% Income from subsidiaries² % % Other Operating Income/Expenses (152) (184) (179) -3.0% (651) (724) 11.1% Operating Income (Loss) (126) Non-Operating Income (Loss) (2) 3 (8) - (29) 1 - Income Tax and Profit Sharing (23) (89) % Net Income % % Banco Votorantim continues advancing in the profitability of its businesses, operational efficiency, and revenue diversification 1. Allowance for Loan Losses (ALL), net of revenues from recovery of written-off loans; 2. Subsidiaries accounted by the equity method 4

5 Revenues Consistent revenue generation Reduction in NII offset by the growth of income from services and insurance sales NII decreased in 2016/2015, reflecting the conservative approach to credit Net Interest Income NII (R$M) Income from Services grew 17.3% in 2016, reflecting the higher auto finance origination Income from Services, Fees and Insurance 3 (R$M) +17.3% 1, % 1,072 4, % 4,641 Insurance (Commission) % , , Services and Fees , NIM¹ (% a.a.) Average interest earning assets (R$B) 5.1% 4.7% 4.9% 4.9% Auto finance origination (R$B) Ratio between Net Interest Income and Average Interest-Earning Assets; 2. Includes guarantees provided and private securities; 3. Result of the stake in Votorantim Corretora de Seguros (insurance brokerage) is recognized using the equity method. 5

6 Credit portfolio by segment Maintenance of the conservative approach to credit Expanded credit portfolio of R$ 60.9B in, growth of 1.4% compared to Sept/16 Expanded credit portfolio (R$B) (includes guarantees provided and private securities) Credit Cards Payroll % +1.4% Dec16 /Sept % -7.1% Dec16 /Dec % -20.6% Auto Finance % +1.6% Wholesale % -14.1% Mar/16 Jun/16 Sept/16 Focus on profitability (vs. growth) 6

7 Credit indicators ALL and 90-day Coverage Credit provision expenses reduced 13% in 2016/ day Coverage Ratio reached 140% in Credit provision expenses reduced 13,1% in 2016/ day CR remains in a conservative level, ending at 140% Credit provision expenses ALL¹ (R$M) 90-day Coverage Ratio² (%) Managed portfolio 2, % 2, / % 127% 140% 90-day Coverage Ratio (CR) Wholesale Consumer Finance ,077 1, , % +4.3% 4,387 2,923 3,267 2,567 3,684 2,638 4Q Sept/16 Allowance for Loan Losses balance (R$M) 90-day NPL balance (R$M) 1. Allowance for Loan Losses, net of income from recovery of written-off loans; 2. Ratio between the balance of ALL and the balance of loans past due over 90 days 7

8 Credit indicators Delinquency 90-day NPL flat in the quarter, and 20bps lower than Auto Finance: delinquency declined to 5,1% in (: 5,3%) 90-day NPL ratio of the managed loan portfolio (%) Banco Votorantim 5.7% 4.6% 4.6% 5.5% 5.5% Consumer Finance 5.67% 5.3% 5.62% 5.3% 5.74% 5.4% 5.54% 5.2% 90-day market¹ NPL increased 40bps over the last 12 months 5.50% 5.1% Consumer Finance Auto Finance Wholesale 5.8% 2.4% 2.0% 5.3% 5.6% Mar/16 Jun/16 Sept/16 1. National Financial System. 90-day NPL obtained in the historical series released on the Central Bank website 8

9 Consumer Finance Auto Finance Auto finance: maintenance of quality in auto finance origination, focusing on used cars Auto Finance Origination by channel (R$B) and first payment default by vintage Inad 30¹ (%) Lower quality vintages Participation in the portfolio zeroed in Sept/16 New cars dealers Used cars dealers Inad 30¹ (by vintage) % 1.3 Dec/09 Jun/10 Dec/10 Jun/11 Dec/11 Jun/12 Dec/12 Jun/13 Dec/13 Jun/14 Dec/14 Jun/15 Jun/16 Steady quality in auto finance origination has contributed to the favorable trend in delinquency 1. First payment default, or % of each month s production with first installment past due over 30 days 9

10 Consumer Finance Auto Finance Auto finance: continued focus on used cars and maintenance of tight credit origination standards Focus on used cars, which represented 82% of 2016 origination Origination of auto loans (R$B) D Cars Market: New cars: -27% Used cars: -3% Maintenance of conservative lending standards Down payment (%) and Average term (months) Average term +6.9% / % 41% 41% 41% 4Q15 Down payment Other Vehicles¹ Used Cars (83%) 10.9 (82%) +6.6% Auto finance interest rate x Selic² rate (% p.y.) Q Sept/16 Banco Votorantim is one of the leading players in the auto financing market 1. New cars, trucks and motorcycles Note: In, the average ticket size was R$ 21,000, and the average vehicle age was 4.9 years (portfolio) 10

11 Personnel and administrative expenses Effective cost management Personnel and administrative expenses increased 2.0% in 2016, below inflation (IPCA of 6.3%) Personnel and administrative expenses (R$M) +2.0% 2,332 2, / % Personnel Labor claims Personnel - Other / % +8.6% % -0.4% 1,123 1, % Administrative % 4Q Efficiency ratio last 12 months¹ (%) Excludes expenses with labor lawsuits Note: The IPCA price index reached 6.29% in the last 12 months. 11

12 Consolidated results Summary: Net Income of R$ 426M in 2016 Highlight to the Net Margin growth and effective cost base management NII and Income from Services¹ and Insurance +2.4% Credit provision expenses ALL -13.1% Services¹ nd Insurance Net Interest Income 1, ,098 1,526 1, ,172 1,072 5,877 1,175 4,702 6,019 1,378 4,641 Wholesale Consumer Finance ,394 1,077 1,316 2, ,373 4Q Q Personnel and Administrative expenses Net Income and Net Margin (post provisions) Personnel Admin % 2,332 2,378 1,210 1,230 1,123 1,148 Net income Net Margin 2, , Q Q Income from services and banking fees 12

13 Funding and Liquidity Funding profile improved over the last years Bills and Credit Assignments account for 50% (R$ 34.3B) of the total funding sources Funding evolution (R$B) Other¹ Securities abroad Time deposits (CD) Loans and onlendings Sub Debt Debentures (BV Leasing) Loans securitized to Banco do Brasil 15.2 (21%) (20%) 13.8 (20%) Bills (LF, LCA and LCI) 16.3 (23%) (27%) 20.5 (30%) LF: R$17.6B LCA and LCI: R$2.9B Dec/14 Sept/16 High Quality Liquidity Assets (HQLA) (R$B) Liquidity Coverage Ratio (LCR) Pro Forma² % 251% Additionally, Banco Votorantim has a stand-by credit facility of ~R$ 7B from BB, which has never been tapped 1. Includes cash and interbank deposits; 2. Ratio of total high quality liquid assets (HQLA) and the total cash inflows for a 30 days period. Considers stand-by credit facility with Banco do Brasil. Excluding it, the LCR regulatory reported the Central Bank in was 165% and the regulatory minimum of 70%. 13

14 Capital structure Basel Ratio of 15.8% in Tier I Capital ratio of 11.2%, entirely composed of Common Equity BASEL RATIO (R$ Million) Dec.15 Sept.16 Dec.16 Total Capital 10,742 9,737 9,219 Tier I Capital 6,686 6,894 6,837 Common Equity Tier I 6,686 6,894 6,837 Additional Tier I Tier II Capital 4,056 2,843 2,382 Risk Weighted Assets (RWA) 70,549 61,626 61,207 Credit risk 62,926 56,871 55,922 Market risk 2,843 1, Operational risk 4,780 3,625 4,615 Minim um Capital Requirem ent 7,760 6,086 6,044 Basel Ratio (Capital/RWA) 15.2% 15.8% 15.1% Tier I Capital Ratio 9.5% 11.2% 11.2% Common Equity Tier I Ratio 9.5% 11.2% 11.2% Additional Tier I Ratio Tier II Capital Ratio 5.7% 4.6% 3.9% Note: In 2016, the minimum capital requirement was changed to 10.50% (11.00% in 2015), For Tier I Capital, it is 6.0% and for Principal Capital it is 4.5%. 14

15 Appendix 15

16 Banco Votorantim Overview Banco Votorantim is one of the leading banks in Brazil Top 10 in total assets, with strong shareholders and shared governance Banco Votorantim is one of the largest privately-held Brazilian banks in total assets largest Banks in Sept/16 - Total Assets (R$B) Shareholder Banco do Brasil 1,483 50% Total Itaú 1,319 CEF 1,231 Bradesco 1,062 BNDES 955 Santander 665 BTG Pactual 195 State-owned Safra 143 Foreign Votorantim 104 Citibank 81 National privately-held 9 th 7 th CEF Banco do Brasil Itaú Bradesco BNDES Santander Votorantim Safra BTG Pactual Banrisul...and also in terms of loan portfolio 10 largest Banks in Sept/16 Loan Portfolio¹ (R$B) State-owned Foreign National privately-held Ownership Structure Votorantim S.A. Total: 50.00% Voting: 50.01% Non-voting: 49.99% Corporate Governance Structure Fiscal Council Audit Committee Compensation & HR Committee Board of Directors Executive board Banco do Brasil Total: 50.00% Voting: 49.99% Non-voting: 50.01% Equal representation of each shareholder Finance Committee Products & Marketing Committee 1.On-balance loan portfolio according to Bacen s Resolution 2,

17 Strategy Diversified business portfolio Focus on increasing business profitability, operating efficiency and diversifying revenues R$ 60.9B Consumer Finance R$ 33.5B Atacado Pillars Auto Finance To originate portfolios with quality, scale and profitability To focus on used auto finance (multi-brand dealers), where BV has a history of leadership and expertise Other Businesses Payroll loans: to focus on INSS (portfolio refinancing) and Private (portfolio growth) Credit Card, Insurance, Student and Individual loans and CrediCasa (home equity): to leverage the existing client base and diversify revenues Other synergies with BB: Promotiva, consortium, etc Corporate Bank Business approach focused on long-term relationships Agility to serve Customer knowledge Capital discipline Active portfolio management Corporate bank: growth Leverage customer base Increase spread and cross-sell Large Corporate: profitability Wealth Management Asset: 9 th largest in the market, with innovative products and growing synergies with BB R$ 53.8B in AuM¹ Private: tailor-made solutions R$ 28.2B R$ 5.3B R$ 27.4B Shareholders Banco do Brasil + Votorantim S.A. XX Expanded² credit portfolio 1. Assets under management 2. Includes guarantees provided by the Bank and private securities 17

18 Consumer Finance businesses Consumer Finance: increased focus on used auto finance and INSS payroll loans (retirees and pensioners) Consumer Finance Businesses Auto finance Loan portfolio (R$B) Payroll Loans Loan portfolio (R$B) New Used (85%) (87%) (88%) Public Private INSS (16%) (12%) Sept/16 Sept/16 Among market leaders in auto financing, with the following advantages: Capillarity: presence in ~12,000 car dealerships nationwide Agility: 83% of proposals with automatic credit decision Expertise: continuous improvement of management tools (pricing, credit, collection etc.) Long-term relationship: first access to customer record Focus on refinancing the INSS payroll loan portfolio (retirees and pensioners)...and on increasing the private payroll loan portfolio Selective operation in public payroll agreements Continuous improvement of management tools (pricing, credit, collection etc.) 18

19 Wholesale business Wholesale: continued focus on improving return on capital Leverage Corporate customer base, increasing spread and cross-sell Wholesale Business (CIB) Private Securities¹ 5.4 (20%) Corporate Bank Expanded credit portfolio (R$B and %) Financ Export / Import Onlending (BNDES) 3.3 (12%) 0.6 Other Expanded credit portfolio R$ 27.4B 9.4 (34%) Loans 2 Highlights and strategy Business approach focused on long-term relationships Deep customer knowledge Agility in the interaction with clients and market Discipline in capital allocation Risk x return management Active portfolio management Grow in Corporate bank (R$ 300M to R$ 1.500M) Leverage customer base Increase spread and cross-sell (FX, derivatives, DCM, M&A) Deconcentrate risk Increase profitability in Large Corporate (ex: unfunded ) Explore competitive advantages, such as DCM: 7.8 (29%) Guarantees provided Local Fixed Income Distribution Ranking 4 Diversified portfolio of wholesale products Includes debentures and promissory notes; 2. Includes export credit notes, working capital and Loan Offshore; 3. Rural Financing e Advances on Exchange Contracts; 4. Ranking Anbima de Distribuição Renda Fixa Consolidado () 19 7 th th 1.8 Distributed amount (R$B)

20 Balance Sheet Balance Sheet BALANCE SHEET Assets (R$ Million) Dec.15 Sept.16 Dec.16 Dec.16/Sept.16 Variation % Dec.16/Dec.15 CURRENT AND LONG-TERM ASSETS 109, , ,338 (0.8) (6.7) Cash and cash equivalents Interbank funds applied 17,187 17,093 17, (0.4) Securities and derivative financial instruments 30,424 28,225 28, (6.4) Derivative financial instruments 2,550 3,398 2,685 (21.0) 5.3 Interbank accounts or relations Loan Operations, Leases and Others receivables 51,135 46,542 47, (7.3) Alow ance for loan losses (4,148) (3,069) (3,671) 19.6 (11.5) Tax credit 7,833 7,238 7, (5.4) Others 4,466 3,268 2,391 (26.8) (46.5) NON-CURRENTS Investments Fixed assets Intangible and deferred charges (0.2) 6.2 TOTAL ASSETS 110, , ,998 (0.8) (6.6) BALANCE SHEET Liabilities (R$ Million) Dec.15 Sept.16 Dec.16 Dec.16/Sept.16 Variation % Dec.16/Dec.15 CURRENT AND LONG-TERM LIABILITIES 102,556 95,349 94,535 (0.9) (7.8) Deposits 4,206 4,535 4, Demand deposits Interbank deposits 1,933 2,153 1,997 (7.2) 3.4 Time deposits 2,192 2,322 2, Money market borrow ings 32,800 38,840 35,673 (8.2) 8.8 Acceptances and endorsements 25,323 18,661 21, (13.9) Interbank accounts (2.8) 19.8 Borrow ings and onlendings 7,893 5,454 5,203 (4.6) (34.1) Derivative financial instruments 2,914 2,967 2,708 (8.7) (7.1) Others obligations 29,337 24,790 24,471 (1.3) (16.6) Subordinated debts 6,928 6,316 6,046 (4.3) (12.7) Credit transactions subject to assignment 15,677 13,208 13, (12.3) Others obligations 6,732 5,267 4,669 (11.3) (30.6) DEFERRED INCOME (1.9) (22.2) SHAREHOLDERS EQUITY 7,617 8,416 8, TOTAL LIABILITIES 110, , ,998 (0.8) (6.6) 20

21 Financial highlights Financial highlights R$ Billion Total Assets Assets under Management¹ -6.6% +13.4% Mar/16 Jun/16 Sept/16 Mar/16 Jun/16 Sept/16 Loan portfolio Shareholders Equity Wholesale % ,62 8, % Consumer Finance Mar/16 Jun/16 Sept/16 Mar/16 Jun/16 Sept/16 1. Includes onshore funds (ANBIMA criteria) and private clients resources. Note: Shareholders Equity includes the destination of dividends (R$ 101 million) in. 21

22 Financial highlights NIM Net Interest Margin (NIM) NET INTEREST MARGIN (NIM) (R$ Million) 4Q15 Var. / Var. 2016/2015 Net Interest Income (A) 1,098 1,172 1, % 4,702 4, % Average Interest-Earning Assets (B) 98,020 93,721 93, % 95,350 95, % Compulsory Deposits (Bacen) % Interbanks Funds Applied 16,689 18,474 17, % 14,740 17, % Securities 30,258 27,842 28, % 28,243 29, % Loan Portfolio 51,049 46,947 47, % 52,329 48, % NIM (A/B) 4.6% 5.1% 4.7% -0.4 p.p. 4.9% 4.9% 0.0 p.p. 22

23 Financial highlights - ER Efficiency Ratio EFFICIENCY RATIO (ER) (R$ Million) 4Q15 Var. / Var. 2016/2015 Total Personnel¹ and Administrative expenses (A) % 2,039 2, % Total Revenues (B) 1,252 1,323 1, % 5,174 5, % Net Interest Income (NII) 1,098 1,172 1, % 4,702 4, % Income from Services and Banking Fees % 961 1, % Income from subsidiaries² % % Other Operating Income/Expenses (152) (184) (179) -3.0% (651) (724) 11.1% Efficiency Ratio (A/B) - period 42.3% 37.8% 42.8% 5.0 p.p. 39.4% 38.8% -0.6 p.p. Efficiency Ratio - last 12 months 39.4% 38.7% 38.8% 0.1 p.p. 39.4% 38.8% -0.6 p.p. 1. Excludes expenses with labor lawsuits; 2. Subsidiaries accounted by the equity method 23

24 Credit portfolio Credit quality indicators Managed loan portfolio rated by risk level¹ (%) ALL Balance (R$M) Generic² All balance / Managed loan portfolio D-H AA-C 11.2% 88.8% 9.4% 90.6% 9.8% 90.2% 9.8% 90.2% 11.7% 88.3% Specific + Additional 8.6% 6.7% 4, , ,152 3, % 3, , % 3, , % 3, ,671 Mar/16 Jun/16 Sept/16 Mar/16 Jun/16 Sept/16 Net Loss (R$M) Credit Recovery (R$M) Net Loss Net Loss/Managed loan portfolio Credit Recovery Write-off 3.9% 9.1% 4.3% 3.9% 1.7% 693 1, , Q15 1Q16 2Q16 4Q15 1Q16 2Q16 1. According to Bacen s Resolution 2,682; 2. Considers credit provisions recognized as Liabilities in the "Other line (see Note #18d of Financial Statements) 24

25 Credit portfolio New NPL rate NEW NPL (R$ Million) 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Managed Loan Portfolio (A) 60,539 58,281 56,806 55,712 55,231 55,422 52,505 51,576 51,250 48,799 46,925 47,031 47, day NPL Balance 3,081 3,563 3,662 3,273 3,154 3,628 2,727 2,712 2,923 2,254 2,174 2,567 2, day NPL Quarterly Variation (B) (388) (119) 474 (902) (14) 211 (669) (80) Write-off (C) , New NPL (D=B+C) 578 1, ,052 (67) , New NPL Rate¹ (D/A) 0.94% 2.24% 1.64% 0.67% 0.98% 1.90% -0.12% 1.57% 1.75% 1.07% 1.15% 2.17% 1.15% New NPL (R$B) Write-off (R$B) 0.94% 2.24% 1.64% 0.67% 0.98% 1.90% 1.57% 1.75% 1.07% 1.15% 2.17% New NPL rate¹ 1.15% % Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 1. Variation in the balance of 90-day NPL balance + loans written-off to loss in the quarter, divided by loan portfolio by the end of the immediately preceding quarter 25

26 Credit portfolio Wholesale has a diversified credit portfolio Top 20 sectors account for 86% of the Wholesale credit exposure Wholesale Sectorial concentration Dec.15 Sept.16 Dec.16 R$M Part.(%) R$M Part.(%) R$M Part.(%) Financial Institutions 5, % 4, % 4, % Sugar and Ethanol 2, % 1, % 1, % Telecom 1, % 1, % 1, % Petrochemical 1, % 1, % 1, % Retail 1, % % 1, % Mining 1, % % % Railways % % % Agribusiness 1, % % % Eletricity Generation % % % Automotive % % % Government % % % Electricity Distribution % % % Residential Construction % % % Oil & Gas % % % Road Cargo Transportation % % % Pulp and Paper % % % Steel industry % % % Slaughterhouses % % % Food industry % % % Services % % % Other sectors 4, % 3, % 2, % Total¹ 24, % 20, % 20, % 1. Numbers exclude private securities and are net of credit provisions. Note: Does not consider application of Credit Conversion Factor of 50% in transactions relating to some specific guarantees provided. 26

27 Ratings Banco Votorantim s main ratings RATING AGENCIES International National Local Foreign Local Brazil Sovereign rating Moody s Long-term Ba2 Ba3 Aa3.br Short-term NP NP BR-1 Ba2 Standard & Poor s Long-term BB bra+ Short-term B bra-1 BB 27